Along the portion of the consumption function that lies above the 45-degree line, saving is
A) positive.
B) negative.
C) equal to zero.
D) equal to consumption.
B
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In the specific factors model, a 5% increase in the price of food accompanied by a 10% increase in the price of cloth will cause ________ in the welfare of labor, ________ in the welfare of the fixed factor in the production of food, and ________ in
the welfare of the fixed factor in the production of cloth. A) an ambiguous change; a decrease; an increase B) an ambiguous change; an ambiguous change; an ambiguous change C) a decrease; an ambiguous change; an ambiguous change D) an increase; a decrease; an increase E) an ambiguous change; an increase; a decrease
Price floors are designed to
A) establish a minimum allowable price. B) allow free market prices to be achieved. C) create shortages where none existed before. D) none of the above.